The Best Investment

Do you know when can you say that you have found the best investment? It is when it puts you in a position to help others and gives you a chance to become a better person.

Online Games and Investing Mentality

Your base was empty. Your command unit was a handful. Your fire power was weak. You could barely attack or defend. That's how it was when you were just beginning to play that addicting online game. But look, now you have a stronger base, powerful defensive weapons and a huge army enough to pulverize a huge enemy camp. So what did you do to arrive at this scenario from almost none at the start?

You managed to do with what you had. You bought only what you need. You utilized your few resources wisely trying not to waste anything. You were most of the time defensive and attacked only when the possibility of winning was big. Though of course, you sometimes gambled with calculated risks. Your first income was spent on things that will gain you more assets and money. 

Well, ladies and gentlemen, that's just exactly what you need to do in real life if you want to grow your money. It's just funny that most people treat online golds more delicately than the one they worked hard for in real life. 

What makes online gamers more prudent in handling their money is  their commitment to grow their army and bases. They create their work plan around it. There's that clear ending in mind unlike in real life where most people don't take saving and investing seriously. Most think that all they need to do is to keep more money then that's it. It's a mistake. It may be effective to some but for the majority, it's impossible to save when you don't have a target. To have a clear course of action, you must have a specific and clear goal. 

Sometimes, it makes life easier when you treat things like a game. But don't forget that understanding and love for it are essential to win big. Patience is needed at the beginning. Once you got a hold of it, had installed greater weapons and trained a huge army, then you can start taking larger risks by attacking bigger and richer camps for more mouth-watering loots.

Grab the Guava

Whenever there's a news about our economy doing well, the usual reply you can read in the comments section is "'di naman namin ramdam yan (we don't feel it anyway)". 

That would always be true for someone who doesn't have a job, does not invest nor study about it, does not spend wisely or does not save. I understand that there are limitations brought to us by circumstances like how we feel our government is neglecting us. But for us to feel the effect of a growing economy, we should be the one chasing its effect. 

We can't be Juan Tamad waiting for the guava to fall. Stand up and grab the proverbial guava.

Investing is Boring, Election is Exciting But

People are on a high during elections and campaign seasons. We feel that the power is in us. We push names of those who think would save us from our current situation. Those who are sitting on the pedestal suddenly kneels in front of us just to get our support.

Elections and candidates usually give us hope for a better future. Some of them might be able to live up to their promise. But most of them don't. But really, it doesn't matter what they do or what policies they create if you don't act for your own future. We may be able to elect the best, but the person that will have the largest impact on your growth is yourself. Your vote won't give you money for your child's tuition fee, your medical expenses, for your planned car or house, your travels or your retirement fund, but your investment today will.

You won't get much high in investment though. It's a boring thing to do. You do due diligence, you research, you ask, you put money, and then you wait. Boring indeed. But your future self will thank your boring old self for doing so while you will forget the names of those you voted and campaigned for. But still, vote wisely. You will only get a better output out of an investment or an election if you use logic and reason more than emotions.

That Investment is Non-Investment

The "Wolf of Wall Street", Jordan Belfort, was blatant in saying that people mostly in the Asian region base their decisions on emotional reasons rather than the logical ones. We first decide based on what we feel then we try to convince ourselves and others by finding logic on that choice we make.

Same thing with our finance management. You could meet a lot of people "investing" on different things. It could be on expensive gadgets, new real estate properties, expensive shoes or clothes, new cars, etc. At a quick glance, you can say that these are all but expenses. But try to ask the person who bought them. For sure, they have a list of reasons why they purchased these things and why they consider these as investments. It really depends on their circumstances and what they are saying could be true.

I hope they earn dividends

But some people, when you ask if other than these "investments" if they have also put money in the stock market, mutual funds, insurance, VUL, UITF or heck even on a savings account for their emergency fund, a lot of them will answer "NO". And they will have reasons for not doing so like saying it's not their priority right now. Shoes, gadgets, clothes over real investments? Sure. It's our freedom to use our hard earned money in any way we want to. But fooling ourselves to believe that what we are doing is "investing" is what could hurt us later in our lives. Are you like one of these people? I hope it will never be too late for us to realize and learn what a real investment is from what is not.

Beating Inflation Black and Blue

It feels bad when you lose money. What’s worse is when you are not aware that you are losing some of it. And what's harder to realize here is the fact that you can't fight something you do not know about.  Majority of Filipinos lose money without even noticing it. They are sleeping soundly at night while their money is kept in their savings account thinking that everything is safe only to find out later that they already lost significant value without even them touching their hard earned moolah. The culprit is sneaky. It will hurt you without seeing how. And his name is INFLATION.

In the 90s, your 500 pesos can buy you a bag of goods and several kilos of rice from the grocery store. But now, you can just hand carry what you purchase with that amount. That’s inflation in action. It is what’s happening when the buying power of your money decreases by time affected by several factors of the economy. And most of the time, inflation beats the interest given by banks on your savings account. Meaning, if you don’t do anything with the money you keep in your bank accounts, you’re assured to lose money in the long run.

If you think that sitting on your savings account is a smart thing, then think again. Savings account is good for the sole reason that it is where you can put your contingency and emergency funds being the most liquid type of investment vehicle. Liquid means your money is accessible and ready for the taking any time the need to use it arises. So having a savings account is a necessity. But if you want to grow your financial wealth, putting all your money in it won’t help you that much. It might look less risky but the truth is it’s the surest way of losing your money without doing anything due to inflation. 

For us to understand it better, let's put in some numbers. 

The inflation rate in the Philippines as of this writing is 2.3%. Meaning, that's how much the value of money is lessened. How about the deposit rates? It's around 1 to 1.2%. At a glance, it's easy to see that you are losing your money to inflation compared to what your money earns in a savings account. So to make your money earn, you have to beat the inflation rate with a higher interest rate. 

There are finance companies or banks that provide options to invest part of your savings to other funds that can give you possible higher return rates than your usual savings interest (i.e. UITFs, EIPs, Bonds).  Though most have lock in period where you will be charged if take out your money earlier than the contract. There are also minimum amount for the initial investment on some of them. You can check it out at the banks, ask their employees, grab some leaflets or go to their websites to see your options.

Then there are also Mutual Funds like what we have with Sun Life Financial where you can start investing for as low as 5000 pesos and can add a subsequent minimum of 1000 pesos to your fund any time. You will also be able to choose the fund on where your money will be invested depending on your risk appetite. Then our professional fund managers will be the one taking care of it's growth. And you can pull out your money whenever you want it. 

And there are many other types of investment you can look at. What’s important now is you understand that inflation is a huge consideration when planning your finances and investments. You can’t ignore it because it is real and it will hurt you whether you are aware of its existence or not. No one can avoid it. But the good news is anyone, with the proper knowledge, can definitely beat inflation black and blue.

Ignorance is Expensive, Cut Your Budget On It

Money has been the common stumbling block for people who want to start investing. Ironically, it’s their money problem that they want to solve with the idea of investing. Almost everyone would say they want to prepare for their families’ future by investing and getting a protection for emergency needs. But still a lot of Filipinos even at their middle age are not doing anything about it. The usual reason is because it’s expensive, they think. 

But if you look at some people’s lifestyle, even some minimum wage earners have that excess money to buy items which they call “investment to self”. They buy gadgets, they dine out, buy expensive coffee, watch movies, have “gimik” with friends, go out of town and a lot more. You know what I’m saying. You see them being shared in social networking sites. Though it’s every person’s right to choose where to spend their hard earned money, there are those occasions that these people who spend their salaries on these luxuries are the ones not giving other people their rights to spend elsewhere. When these people who do not spend and save their earnings wisely meet an urgent need for their family (i.e. accidents, hospitalization, calamities, illness, death), they have no choice but to ask help from others who they know have saved some. 

Of course, not all who ask for help are irresponsible. Sometimes, no matter how prepared we think we are, the worst things happen and surprise us. And it’s always good to help others. But talking about those who don’t help themselves first and run to other people for their emergency needs, I think it’s unfair for those responsible people who earn the same as they are yet try harder in saving for their own families’ sake.

The fact is if you really want to invest, you can start for as low as 50 pesos per day to get as much as Php 700,000 pesos in protection for your family and possibly Php 1,000,000 (yes, that’s 1 Million) for your retirement fund. That’s cheap, right? You just have to give up some of these “investment to self” that you really don’t need. Or if you can’t give them all up, you can at least downgrade some of them. Downsize your coffee, fewer 3D movies, drink only water when you dine out, travel in budget, cut on your beer bottles, etc. To start on your investment, all you need to do is prioritizing your spending then ask the right people. Then act. 

Truth is protection and investment are not expensive, irresponsibility and ignorance are.


Please like our Facebook page, Layman Investment and follow me on Twitter, @lm_investment. If you have questions/suggestions/comments, you may also reach me at laymaninvestment@gmail.com. Hope to hear from you soon.

4 Ultimate Mistakes of People Who Won’t Start Investing (But Actually Like and Need To)

Apart from planning and talking about investments, and not doing it, here are some of those things that lifelong wanna-be investors always talk about. Yes, they always wanted to invest but never did and still haven't. These are their excuses.

1.       Cannot afford the amount to start the investment – You don’t need to invest the amount that you don’t have. You need to review your financial flow first. Read, study or have a financial advisor to help you. His role is to help you manage your finances, prioritize your spending and guide you on the investments which will suit your need. It’s always your needs first, current status and your target before discussing the investment for you. If you do not find him doing this, chances are he’s just after the commissions. But don’t worry; there are only a few who are like this. And it won’t be that difficult to recognize if your advisor is up to no good. The key here is to check the target investment first and how it is done before saying no.

2.       Spouse, parents, family member, etc doesn’t like it. – So… what? Each investment is created for a specific need or plan of an individual. One might not suit another person. But you are not the other person. You know your plans and your needs more than the others. Decide for yourself. Now move.

3.       Afraid of being scammed – People can’t be blamed for being skeptic regarding investments. But being affected totally by the few schemers and avoiding investment at all and just saving all your money in a savings account or just inside your piggy bank is one sure way of being a victim of money fraud which is called “inflation”. Start reading and asking the people who knows about investing. Be guided. Work out your plan. Then begin.

4.       Planning to start later when the situation gets better – How will you know if situations will get better? It could be worse. But you’re also right, it could be better. But the irony is that investments, if done right, will help make situations better. So a good situation will definitely become better with investments. What’s more with a bad one? Invest now, and your future self will thank your old self later for doing it.

So, are you guilty with some of them?

Got questions about investments? Let me know. Message me at laymaninvestment@gmail.com or at rogie_ylagan@yahoo.com 

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Start Your Investment (But How, Where, When, Why?)

Handling your investments includes the technical and non-technical aspects. And it also involves a lot of common sense. We usually leave this part while thinking that the how-to-dos are enough to manage your investments properly. But are we really doing it right?

People invest on many things such as cars and houses. By working hard and smart, they save enough money for the down payment and then have their jobs and savings keep up with the amortization. But we are all aware that bad things happen on the most unexpected time. Accident may happen to your car the moment you drive it out from the casa. And your house can be burned down to ashes on the first day you moved in. So to protect your investment, the first thing you do when you purchase a house or a car, you get insurance for them. So even if the worst thing happens the moment you get a hold of the keys of your car or your house, possible expenses will be covered by insurance. It is even now a requirement to get one before you can get a house or a car loan. That’s how valuable insurance is for your assets.

Can happen even if it isn't your fault.

Now imagine this. You decide not to get insurance right away. You choose to save money first in the bank or in other money investments like mutual funds, stocks, bonds, time deposits, etc.  After several months of saving, you were able to keep aside a bit of money. Let’s say a hundred thousand pesos.

And then the misfortune happens. You got into an accident. Either you got injured, get disabled or worse, you die.  Whichever of that happens, your family will surely need money for that.  Here are two scenarios that could happen to you after that unfortunate event:

Scenario 1: You get injured and need some time to recover

You will need money for your hospital bills. While you’re confined and resting to recover, your income will stop because obviously you can’t work. That Php 100,000 you saved will be needed. Then you hope that it’s enough to cover the hospital bills  and aside from that, including everything else that you were paying for from your monthly salary (bills for electricity, water, cable and phone, monthly rent or loan amortizations, food, etc). Good for you if you have a health card but still, it can’t cover everything. Unless you have reimbursement benefits from your company, you will also need to shoulder amounts for your medicines. And remember that you only have Php 100,000 for all of these while not having work for unknown period of time.

Scenario 2: You die from the accident

Worse is you may die from it and that Php 100,000 is the only money you have. Funeral services now are exorbitant. Let’s say Php 40,000 will be set aside for it. And your family will be left with Php 60,000. That amount for the rest of their life? Maybe you left some other assets like your home, car and others which I hope you had already paid in full or got Mortgage Redemption Insurance for them. And these might be subjected to estate taxes before being transferred to your loved ones. It could be worse if you’re the solo income earner in your family.

Start saving somewhere

But again, the good thing here is it’s not yet happening. You still have time to prepare for these possible scenarios. There are many ways to prepare for it.  And each scenario has its own solutions.

For Scenario 1, you will need to study all your expenses right now. Check out each of them and see which among them you can remove and live without. Maybe you need to avoid eating out most of the time. Start cooking your own for your “baon”.  Lessen your movie days and you might want to watch some of them by renting dvds and see them at home with your friends and family. The story won’t change anyway even if you’re late seeing it than others. You may also cut off some from your vices (less bottles of beer per month). Cut off some of your magazine subscriptions. Try commuting once in a while. I’ll stop there.  I will leave the specific money saving ways to you since you know your situation better. The bottom line here is you need to save. This will give you more money to keep and quicker time to grow your “emergency fund” (more of this in the next posts) for such needs.  Check your lifestyle and spend wiser. This will help you and your family to survive if scenario 1 happens.

On the 2^nd Scenario, you also need to do everything that was mentioned above. But one important thing you must add to that to prepare yourself and your family is to get an insurance policy. In purchasing cars and houses, we invest in insurance to protect our investment for any possible damage that might happen. So logically, you must do it for yourself as your body is your number one investment tool. In our scenario, you were able to save at least Php 100,000 before death occurred. In reality, a lot of us have difficulty to save that amount even for a long period. But most are able to keep small amounts from time to time. But due to lack of self-control, many are not able to keep that money intact. More often than not, we are tempted to spend it for other stuff which are more often than not, unimportant. So when the time comes that they need the money, they don’t have anything to show.

Are you and your family in good hands?

Good thing today is that insurance policies offered by different companies are made to fit the different needs and capabilities of different people. There are still those traditional life insurance policies which most of us are familiar with. But better things now are being offered especially for the young ones. You can now start getting an insurance policy and at the same time start a long term investment which you can use as your retirement fund or for business start ups later on. Those small amounts that you’re able to keep and are tempted to use in buying unnecessary things can be put into better use in this type of investment. More on this type of investment in the next posts as well.

If we are really serious in thinking about our family’s future, it’s not hard to identify what we really need to start doing. On the next posts as mentioned above, we will talk about what we call the “emergency fund” and “insurance + investment” types of policies. But if you are raring to go soon about these things, just send me an email at laymaninvestment@gmail.com or at rogie_ylagan@yahoo.com and I’ll be happy to share with you whatever that is which I also learned from others. Good day and God bless.

Things You Need When You Die

One of the basic tenets of preserving and increasing your assets is by identifying your needs from your wants. This is a financial advice that you will always encounter. Once you get the list of your needs and wants, it will be easy. But what people find difficult is identifying what they truly need. This is true since we also at times create our own reasons to justify the unimportant a necessity.

Most of us think that needs are tailor made for each person. But basically, we are all the same species that supposed to have the same needs but society affects our perception of it which results in the differences. As we go along, there will be additional needs that come up in every stages of our life that we have to cover. But the sad part here is we keep on chasing these new necessities while ignoring the basic ones until we need them. And usually it’s too late. So how do we know which basic needs that we need to address as early as possible? 

You still have time

I use this simple formula that helped me recognizing my own basic needs which you can also try for yourself. To know what these basic needs are, I just ask myself the “what if <bad thing happens>?” series of questions. And these bad things are the inevitable ones.  A lot of these scenarios have high chances if not 100% of happening within just a matter of time. These questions get me into thinking of the post-scenarios. It also helps me prepare and create solutions to lessen the after-effect of these scary situations. So what do these questions look like? Here are some examples.

• What if I lose my job tomorrow? Or my wife's? Or both of us?
• What if I get into an accident that disables me?
• What if I or a family member gets a major illness?
• What if I die early?
• What if any of the above happens, what will happen to our mortgages, loans, etc?  my children’s education? my family’s future?
• What if I grow too old, will I have enough money to enjoy my long years of retirement? Or pay for my medical bills that come with age?  

It’s just right when we say that we need this new smartphone that can make our work easier, or a new car for a more comfortable and safe travel to your office, or a new dress or bag as additional investment needed for your career. We do need these things and we rightfully deserve to have these things for our hard work. So you buy these things. But what if some of these bad scenarios mentioned above happen? Are you prepared?

Do you have enough savings to cover the after effects of let’s say a lost job or an injury or an illness? How long can your family survive with that savings amount you have before you can get a new job or recover from your ailment? Or what if the worse happen? You die. Do you even have prepared for the high expense of death services? And what will happen to your family if you’re gone soon especially if you still have very young kids? What more if the properties you purchased like your car and your house are mortgaged, how would you leave your spouse with that burden? Did you prepared for it as well? These things are what we really need which we realize only when bad things happen.

What's your dream retirement?

Don’t worry as these are just example and are not yet happening on you. But who knows. It might be soon. But I hope it won’t, not on me and not on you. It’s not that I’m wishing everyone bad things to happen. But let’s be optimistic. Yes, optimistic. These things might happen but you read it here and you got reminded. So you haven’t prepared for these things yet? Good. I really mean good for you because for everything mentioned above, there are different types of investments you can get into so you will be able to shield your family from worst things after any of the scenarios above happen. 

It’s good that you realize your basic needs now and you still have time to prepare. I can share to you on what I exactly did to become ready for these things that helped me sleep well at night. We’ll discuss these things on the next posts. But if you are raring to start as soon as possible, you can contact me directly right now. Email me at laymaninvestment@gmail.com or at rogie_ylagan@yahoo.com .

The clock is ticking.  When will you begin? Please share this post to others if it helps you as it might also help them. Thanks!